Wednesday, April 12, 2006

The Poverty Question Revisited

A response to Letter to "Why are many people in developing countries poor?"

On one point I agree with the writer of the letter to the editors. The fault for the poverty of the millions of people in the developing world has little to do with ", the people’s own laziness" or "their lacking industriousness". But the answer isn't "colonialism", "the classical imperialism and the world wars" and certainly not "the essence of capitalism itself" There is a misconception underlying all of the author's attempts to find solutions to the poverty question, whether the complicated historical ones, or the "simple", and extremely misguided, central one: Private Property. The article simply asks the wrong question. The right question is: "Why are the rich so rich?"1

For it is not the poor that are the exception, the rich are. For 99 percents of all of human history, the luxuries we in the west (and in islands of wealth in the developing countries) take for granted – health and low child birth mortality, let alone cars and phones and vacations – simply did not exist. Ever since the Agricultural Revolution (or actually revolutions, as agriculture was apparently discovered independently in several places) after the last ice age, mankind has lived near subsistent level, and its economy was strictly Malthusian – living under the constant shadow of disease and death, with a constant fear of hunger.
As recently as 100 years ago, life expectancy at birth in the US was 47. In Mexico it was 33. Infant mortality in the UK fell from 154 per 1000 births in 1900, to 6.3 in 1998 ( In the developing world, things are much as they were before, with somewhat better medical attention and considerably more dangerous weapons – it is the West's ascendance that needs to be explained.
The truth is no one knows exactly what happened that made the West rise. Whether you call it "the Enlightment", "the Industrial Revolution", "the Scientific-Industrial-Technological Revolution" or "the Spirit of Capitalism", some changes in the intellectual, economic, social and political climate in Europe made its people break away from Nature's tyranny, and allow them to live in a world of abundance.
This difference was already manifesting itself in the 15th century, when Western explorers reached every corner of the world, while the Chinese abandoned their own (widely successful, at least from a technical point of view) explorations (See Levathes Louis "When China Ruled the Seas: The Treasure Fleet of the Dragon Throne, 1405-1433). By the 19th century, it became utterly clear, when the west could do whatever it wanted wherever it wanted, and the natives (with the exception of Japan, which realized the need to modernize) could do nothing at all.
Those who claim that the reason for the West's rise is colonialism are, of course, putting the cart before the horse. To put it bluntly, in order to exploit the natives of Africa, Asia and the Americas, Westerners already needed a qualitative advantage on them. Whatever wealth the west accumulated with the slaves it brought to America and the West Indies (and recall that comparable wealth did not arise from Muslim Black Slavery) – the slaves were transferred across the Atlantic in ships which were, in and of themselves, highly sophisticated technological creations.
It is beyond the scope of this short article to address the question of the Rise of the West. What we want to know is what should be done in order to help the people who were not as fortunate as Westerners to make the move – to gain riches. And the answer is not to abolish private property.
The author's position would've been somewhat more understandable had he written his article in say, 1945. Or, better yet, 1931. The shortcomings of Capitalism appeared, at the time, especially severe. But since then Communism has been tried in many countries, from China and all the way down the Alphabet to the USSR. It failed.
Now, there can be excuses for many of the failures. The Soviet Union was shaped by one of the most terrible dictators of the 20th century and maybe it was never able to escape that shadow. Eastern Europe received no help from the Soviet Union (indeed was forced to pay reparations) while the US lavished funds on the West. China had Mau Tse Tung. The Kibbutz movement in Israel was corrupted by the bourgeois Zionist Capitalists around it. Cuba suffered from US Embargo, and all of the African countries suffered from the long lasting effects of imperialism.
Whatever the merits of these explanations (and many others), and some of them have their merits, there remains one undisputed fact: No single communist country has become rich. Capitalism had had its hits and misses; but to drive the point home: it had hits.
Personally, I feel that we have a fairly good idea about why Communism always failed: because it ignores the major insight of economics – that people respond to incentives. In order to generate wealth, people have to be motivated. Adam Smith had said it best, almost 230 years ago:

"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."

But even if you disagree with this analysis, the overwhelming argument remains: No one ever figured how to make a Communist regime work. If you have your own country, you are welcome to try to beat the odds and be the first, but please don't take me, and the world's poor, along with you.

Note on the Editors' Commentary
The author of the 'letter to the editors', despite all his faults, at least identified the real problem at hand: people in the so-called developing world are living in wretched, miserable conditions, while the people of the West live in luxury. As flawed and erroneous as his diagnosis is, at least he realizes the problem. Unfortunately, the Editors don't.
Bizarrely, the Editors can frame the question. They write:
Those in the Third World starve while those in the First World watch them on color television — and are glad to be doing fine.
But the catch is in the next phrase:
Comparatively at least

You see, unlike the letter's author, what troubles the Editors is not that the people of Angola have a 42% literacy rate, that their life expectancy at birth is less then 50 years, that infant mortality rates there is 135.7 per 1000 birth or that the Gross Domestic Product per Capita is 700 U$. Nor does it matter that they have about 50 % unemployment.
(Source: Oh no, the real concern is that the poor in these countries, just like the poor in the west "live for capital".
You shouldn't ask why people in Africa are starving and dying, because that legitimizes Capitalism: " If deficient capitalism would be the reason for the especially wretched squalor in developing countries, then capitalism as such gets off the hook". For the Editors, the problem isn't poverty – it is Capitalism.

1 What follows is my attempt to articulate mainstream economic ideas, and I deserve no credit for originality in anything but formulation. For further reading, I highly recommend David Landes's "The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor" (Which for all its flaws is a superb historical analysis of the rise of capitalism), and William Easterly "The Elusive Quest for Growth: Economist's Adventures and Misadventures in the Tropics" (For an analysis of the failure of industrialization in the Third World and what can be done about it)

Monday, April 10, 2006

Second Post, and Virtual First Amendment

I'm still experimenting with this Blog thing, but here is something I wrote a long, long time age, and I suddenly have the place to show it:

On Constitutional Interpretation

I enjoyed reading Barry Krusch's "Would the Real First Amendment Please Stand Up? ( In it, Krusch argues that the US Supreme Court has radically altered the meaning of the First amendment. The sole purpose of the amendment is to prohibit Congress, not the Federal government as a whole and certainly not the states, from making any law that prohibits any kind of speech. The Court is wrong to distinguish between "protected" and "unprotected speech". As the late Supreme Court justice Hugo Black famously put it "'No law" means 'No Law'

I want to defend the assertion that, bizarre as it may sound, Judge Black was wrong. I think that both common sense and the historical record dictate that the US Supreme Court actually does a fairly good job on the lines of interpreting the Constitution. While I will not defend any particular test or decision of the Court's, I will argue that the Supreme Court correctly recognizes that (1) The first amendment originally referred not only to Congress but to the Federal Government as a whole, that (2) The passing of the 13th, 14th and 15th amendment marks a significant shift in the Constitutional system of the US, thus expanding the prohibition of limiting free speech to the States. Most unintuitively, I think that (3) the Supreme Court is correct in not regarding every form of expression as 'free speech' for the purposes of the first amendment.

When analyzing the Constitution we should keep John Marshall's famous statement in mind: "We must never forget that it is a constitution we are expounding" Interpreting the Constitution is not merely an exercise in historical analysis or in logic, although it must entail both. Determining the meaning of a Constitution is an act of governance – and the role of the Supreme Court, like the role of every over political organ in the United States, is determined in the American Constitution: "[to] establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity"

The Art and Science of Constitutional Interpretation

(1) "Congress shall make no law": The First Amendment specifically forbids Congress from making any law prohibiting the freedom of speech. But does that mean that any other agent of the federal government can limit that freedom? If the purpose of the First Amendment is to protect freedom of speech, that makes would make no sense. After all, Congress is in control of the Federal budget. Any agent of the Federal government is a paid agent of the US Congress.

Suppose a law forbids me from doing something, does it make sense to allow me to do it though an agent? There is a Hebrew expression that says, in effect, "The opinion that counts is the opinion of the rich". Or in American parlance: "Money Talks". If an agent of Congress could suppress the freedom of speech it would completely void the first amendment.

(2) The Fourteenth Amendment and the Second American Revolution:
Central to the understanding of the so-called "incorporation" doctrine (that is, applying the protections of the Bill of Rights to the States) is the Fourteenth Amendment:

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

The context to this article is vital to understanding its meaning. Simply put, the Fourteenth Amendment is the constiutionalisation of the greatest change to have occurred in the America since its founding and until the present day: The American Civil War.
The American Civil War was a second American Revolution. It utterly transformed the economic, social and political balance between the Agrarian South and the Industrialist North, and it brought a radical change in conception of race relations in the United States.

Until the Civil War, the United States was dominated by Southerners and Southern interests: Most of the Presidents, Cabinet Secretaries, Supreme Court Justices, etc, were from the South. The US Constitution was largely conceived by Virginian James Madison, in a convention presided by George Washington and the first twelve amendments to the constitutions were carried out under Southern Presidents: Washington and Thomas Jefferson.

The pre-1865 constitution, thus, was a Southern constitution, based on Federal principle very different then the principles of Modern America. The main purpose of the Constitution, and particularly of the bill of rights, was to protect US citizens and States from the Federal government. The protection of the state's citizens from the state was to be done through the state constitutions, not the Federal one. Thus, up to and even during the Civil War, Northern antislavery advocated all agreed that the constitution forbade the Federal Government from abolishing slavery in the states – and the more extremist of them, like William Garrison, called it a "Covenant of Death, and an Agreement with Hell" for that reason.

But the Civil War changed everything. It brought to power, for a brief period, a group that wanted a complete change in the Southern social order. The Republican Congress in the 1860s had a completely different conception of national power than any that came before. For a variety of motives, both noble and base, post war Republicans wanted to use Federal power to protect American blacks from white Southerners. Following that view, President Grant had sent in Federal troops to protect Reconstruction governments and to fight off the Ku Klux Klan. And the constitutional manifestations of this view were the 14th amendment.

The 14th amendment transformed the antebellum Constitution. The role of the Constitution was not only to govern the Federal system – now the Constitution was also there to protect the people from the states they were living in. The Federal government was completely transformed, and the long hand of the state could reach out to protect Citizens of the several states from their own governments. This view took time to assimilate – but when in the 1950s and 1960s, the US Supreme Court had proclaimed its various Civil Rights decisions; it was fulfilling the purpose of the 14th amendment, as it was originally conceived.

Thus, although the first amendment literally says 'Congress shall make no law…' the Court is correct in interpreting it as "The US Government or any State government or any agent thereof"…

But what does "Freedom of Speech" means, surely that is straight forward isn't it? Well, actually, no, it isn't:

(3) The all elusive "Freedom of Speech":
Even Barry Krusch acknowledges that the words "speech" in the 1st amendment requires clarifications. The fatal flaw of his entire book can be summarized by quoting one line out of his critique: "Luckily," Krusch tells us "there is a broad societal consensus that these words should be seen broadly"

There is the rub! What does 'broadly' mean? Well, the broadest possible interpretation would be, roughly, something like "Communication of information via any media whether book, comic book, newspaper, radio, television, CB radio, walkie talkie, Braille, sign language, [etc]… ". But what does it mean?

Suppose I want to 'Communicate information' by putting the face of Benjamin Franklin on green pieces of paper and handing them to other people. If Congress wants to suppress my right to hang out green pieces of paper with faces of dead American statesmen on them, isn't it abridging my right for freedom of Speech, based?

But then what happens to Congress's authority to "coin money… [and] To provide for the Punishment of counterfeiting"? Recall that the first amendment amends the constitution – that is, anything in it that clashed with the 1st amendment should be out of the water? Did Madison change his mind and decide that he did not want to give Congress the right to coin money and punish counterfeits?

Now, suppose I like Krusch's book so much I want to sell it to people all over the US. Krusch may object, but then, if he can sue me and prevent me from selling it, surely Congress is, via Krusch, abridging my right of free speech, interpreted broadly?

But… the Constitution allows Congress "to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries". Is that out of the window, too?

And what about if I want to lie under oath, or cheat on my tax forms, or tell the police that I don't know where the bunk robber went? When an FBI tells me to "freeze" is he not a paid agent of congress violating my freedom speech?

The point should be clear enough; Interpret "Freedom of Speech" broadly enough, and government is rendered impotent. Some form of "Speech" cannot be protected under the 1st amendment. Some forms of expressions are "protected speech" others are not – telling which is which the hard part is.

The US Supreme Court will probably keep wrestling with determining what Speech is protected and what is not. Like Krusch, I hope it will interpret "speech" broadly. But whether I agree with the decisions of the Court, at least it correctly recognizes the problem.

Thursday, April 06, 2006

First Post

Not really Historic, but welcome to my "The Thousand Words", my blog about books, politics, economics, religion, and a little bit of Philosophy and the Law, and probably a few other things. Right now I plan to put some book reviews there, a few links, maybe commentry on other people's comments.